STANBIC PMI: Businesses did well in September

Kampala, Uganda | THE INDEPENDENT | Increased advertising by companies during September played a role in sustaining strong business output and attracting new clients as the headline Stanbic Bank Purchasing Index (Stanbic PMI) dropped slightly to 54.2 compared to the 56.3 posted in August. The threshold for a positive business outlook is 50.0.

Christopher Legilisho, Economist at Stanbic Bank said on Oct.8, “Strong business output and new order growth were linked to robust client demand, reinforced by effective advertising. Firms foresee healthy client demand conditions over the coming year, with plans to increase investment in advertising and new products. Employment remained healthy in September, with firms stepping up purchases and inventory stocks on the expectation of sustained strong demand.”

The survey indicates that the Ugandan private sector remained in growth territory during September. The continued improvement in business conditions was driven by expansions in output, new orders, and employment. Demand strength also supported positive output expectations for the year ahead, as firms foresee increased business activity.

Parallel to shorter lead times on inputs, companies continued to raise their purchasing activity amid greater new orders. In turn, firms sought to build inventories further to support future output.

Meanwhile, despite broadly unchanged staff costs, higher purchase prices pushed total operating expenses up. In line with higher overall input prices, companies signaled a renewed rise in output charges.

Overall input costs continued to increase in September, as has been the case in each month since August 2021. Panelists commonly stated that higher utility bills (including water and electricity) and supplier prices were driving factors behind inflation.

In line with greater new orders, Ugandan companies expanded their workforce numbers in September. The current sequence of job creation was extended to a year and a half.

Sufficient capacity enabled firms to resume the depletion of backlogs of work, following a rise in August. Supporting the rise in employment was further business confidence in the year-ahead outlook for output. Optimism reportedly stemmed from planned investment in new products and more planned advertising.